December 7, 2007 -- Kia Motors Corp. (KSE:000270), South Korea's second-largest automaker, will kick off commercial operations this week at its second plant in China as it looks for ways to revive sales in the world's fast-growing auto market, the company said Friday.

The US$650 million factory at Yancheng in the eastern province of Jiangsu will eventually have an annual production capacity of 300,000, doubling Kia's China capacity.

"The second plant in China isn't just aimed at boosting production, but is offering high-quality vehicles to Chinese consumers," Kia Vice Chairman Kim Ik-hwan said in a statement.

Kia, an affiliate of Hyundai Motor Co. (KSE:005380), began building the second plant in October 2005.

Production at the Yancheng plant comes at a time when Hyundai and Kia are running into difficulties and declining sales because they failed to slash prices and introduce new models fast enough to fend off competition from Japanese and German rivals in the world's No. 2 auto market, analysts say.

Last month, Kia's Chinese venture sold 9,757 units, down 6.7 per cent from a year earlier. Sales of Hyundai's venture in China plunged 21 per cent on year to 20,594 units.

Hyundai has already cut its annual sales target in China by 16 per cent to 260,000 units.

To revive sales, Hyundai and Kia consolidated their production and sales divisions in China last month.

Under the consolidation, Seoul-based Hyundai Motor Vice Chairman Kim Dong-jin and Kia Motors Vice Chairman Kim Ik-hwan will supervise the South Korean automakers' operations in China.

On Saturday, Hyundai Motor Chairman Chung Mong-koo will attend a ceremony to mark the start of commercial production at the Kia's second plant, Kia said in the statement.

Source: Asia Pulse